Introduction
In late February 2025, the European Commission adopted a new package of proposals which are intended "to simplify EU rules, boost competitiveness, and unlock additional investment capacity." These first ‘Omnibus' packages cover sustainable finance reporting, sustainability due diligence, EU Taxonomy, carbon border adjustment mechanism, and European investment programmes.
According to the Commission President, "EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals."
In this brief article, we review some of the key changes to the sustainability reporting and due diligence rules under the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and EU Taxonomy and outlines the take-aways for businesses in Ireland.
Sustainability Reporting
The main proposed changes in the area of sustainability reporting are as follows:
CSRD
80% of companies removed from CSRD scope:
- Now applies only to large corporations (1,000+ employees, €50 million turnover).
- Mid-sized companies will no longer be required to report but can voluntarily disclose sustainability metrics.A 2-year delay for reporting deadlines:
Companies that were set to report in 2026 or 2027 now have until 2028 to comply.
EU Taxonomy
Simplification of EU Taxonomy reporting:
Reporting is now voluntary for companies with fewer than 1,000 employees.
70% reduction in reporting templates and introduction of a financial materiality threshold to focus reporting on significant business areas.
mandatory sector-based sustainability standards.
Sustainability Due Diligence
The main changes in the area of sustainability due diligence are as follows:
The CSDDD, which mandates businesses to monitor their supply chains for ESG risks, is being revised to reduce complexity while maintaining accountability.
Due diligence requirements now apply only to direct business partners.
Companies are no longer required to conduct in-depth assessments of indirect suppliers unless they have evidence of ESG risks.
Assessment frequency reduced:
-ESG impact reviews now required every five years instead of annually.
- Companies can still conduct ad-hoc assessments when necessary.Legal liability reforms
-EU-wide civil liability provisions removed—cases will now be handled under national laws.
-Victims retain the right to compensation, but companies will not be over-penalized.One-year delay in implementation
-New compliance date: July 2028 (previously July 2027).
- The guidelines for businesses will be published earlier (July 2026) to give companies more time to prepare.SMEs protected from excessive data requests.
Larger corporations cannot demand unlimited ESG data from small suppliers—reporting obligations for SMEs are now capped.
Takeaways for Irish business?
These are proposals only. They will now be submitted to the European Parliament and the Council for their consideration and adoption. The final, proposed changes to the CSRD and CSDDD will enter into force once the co-legislators have reached an agreement thereon and after publication in the EU Official Journal.
Until then, while direction of travel on EU sustainability reporting and due diligence rules is clear, the current versions of the CSRD and CSDDD continue to apply. This means the transposition of the CSRD under the Corporate Sustainability Reporting Regulations 2024 remains the law in Ireland for in-scope Irish incorporated companies.
If the current proposals are passed into law this year, a considerable number of companies which are currently in-scope, especially the so-called second wave of companies due to report in 2026 on the financial year 2025 will fall out of scope. And for those companies who will remain in scope, the reporting deadlines will be pushed out by two years.
The proposed changes to sustainability reporting and due diligence requirements, do not alter the importance of sustainability and climate change for business. By focussing on these issues, and adopting clear, science-based sustainability strategies - properly implemented with legal input and support - companies can increase the value of their business, enhance their relationships with their stakeholders and manage sustainability and climate change-related risks.
As they say, what gets measured gets managed. Even if no longer mandatorily required, adopting proportionate sustainability reporting and due diligence practices on a voluntary basis is likely to benefit companies, their shareholders, and stakeholders, in the long term.
For more information, please contact John Gaffney or your usual contact in Beauchamps.
